Wednesday October 6, 2004
Table of Contents
2. Top Ten Reasons Why People Strike Out on Their Own Into the Brave and Unforgiving World of, “What the **** Were You Think?”
3. Readin’ and Ritin’ Time – Guy Kawasaki has a new book. Plus Bill has a few book ideas of his own
4. Opportunity Knocks For Us All – Some thoughts on freedom and entrepreneurship by Bill
5. New Fund For Early Stage Dudes and Dudettes
6. Romanian Alert
7. A Romanian Needs Some Help
8. Bill’s Reply to the Romanian + Some Riffing on Resumes and Career Development
9. Cool and/or Interesting Sites – Check ‘em out…NOW!
11. Let Me Introduce Myself…Pleased To Meet Me – Entrepreneurs Say “Hello”
12. Correspondence from the Masses
Recently, I’ve been chatting with some friends and business contacts about the nature of entrepreneurship. Why do people do it? What drives people to try this lifestyle that is so fraught with failure and ruin?
As I ruminated on this subject, I naturally came up with a Top Ten List. And as I put this newsletter together, I realized (almost unintentionally) that some themes (beyond entrepreneurship and venture capital) developed: English history, arbitrary rule, Romance languages, freedom, barbarians, and more darn Romanians than you can shake a loaf of bread at.
Let’s see if any of this makes any sense to anyone else.
2. The BillSnow.com Top Ten Reasons Why People Strike Out on Their Own Into the Brave and Unforgiving World of, “What the **** Were You Thinking?”
10. Flexible schedule
9. Pride of being your own boss
8. It’s just cool to be filthy rich
7. You don’t care anymore about burning bridges…because you’re filthy rich
6. Ability to buy a big house…in Chicago
5. Put your kids through school. Grade School. Private grade school. In Chicago.
4. Impress the chicks at hipster restaurants by pealing off a few dozen c-notes to pay for the sushi
3. Mercedes-Benz, baby! No, wait a minute. Bentley! A tricked out Bentley, while we’re at it.
2. The ability to afford a really cool mid-life crisis
And the number one, BillSnow.com reason to become an entrepreneur:
1. When you’re rich, you are no longer considered crazy. You’re “eccentric.”
A good friend recently recommended Guy Kawaski’s new book, The Art of the Start. I picked it up this weekend and I’ve just begun to read it. Good stuff. I recommend this book to any and every early stage entrepreneur. Aw, heck, everyone should buy a copy.
I’ve always enjoyed Guy’s writing, and this book is a real pleasure. Guy has written some great articles over the years, and his style and knowledge have definitely had an impact on me. A good impact, for those scoring at home.
Truth be told, I hate Guy Kawasaki. He writes like I want to write. I am jealous. His stuff is that good. And when I say something like that, you know it is good stuff, because I hate most business books and most business articles. Most business writing is plain vanilla, baby. No heart, no soul, no meaning. Just bland words written by a self absorbed stiff.
If you want the opposite, buy Guy’s new book.
Since we’re on the subject of authorship, and since I’ve already taken a stab at writing a book, I’ve decided that one of my life’s goals will be to get an actual book actually published. I’m working on a couple of ideas, and I thought I’d share them with everyone. I’d be interested in hearing if anyone thinks these are viable book ideas. Conversely, I may be interested in turning one of these into a screenplay. Screenplays are much shorter, after all. Did you realize a 2 hour movie probably only has 100 pages of text?
Anyway, on to my book ideas:
Realizing that by rearranging certain letters in the brand names Microsoft, Apple, Cisco, Intel, eBay, Sun, Oracle, Amazon, Salesforce, and Palm, then cross checking those results by removing certain letters found in Webvan, Pets.com, Scient, Viant, and MarchFirst, and employing a paradigm based upon Keith Richard’s genius use of a blues guitar tuning to write country songs that everyone thinks are actually rock’n’roll songs, our hero realizes he has unlocked the secrets to one of the most mysterious sects in all of entrepreneurship: Early Stage Venture Capital. Come and read these incredible findings, and discover for yourself the many myths and misconceptions of early stage venture capital.
Oh, wait a minute. I think I’ve already written this. If you haven’t done so already, read it now. If you’ve read it before, read it again.
Following the story of one of the Germanic barbarian tribes of the great migrations of the 5th and 6th Centuries, “When Angels Turn Into Angles” is an alternate history of early stage investing gone bad using the aftermath of the fall of the Western Roman Empire as a paradigm. Kind of.
Now, all I have to do is tie in the Saxons and Jutes, as well as the Battle of Hastings, Shakespeare, and the Great Vowel Shift, and I'll have a venture capital companion piece to the history of the English language.
Well…maybe that’s a bit of a stretch.
All this talk of barbarians and history naturally leads us to the notion of nobility and its corresponding and resulting arbitrary rule. Stay with me, I’ll make a few points.
As best as I can tell, the “nobles” of Europe descended from the barbarians who beat the tar each other following the collapse of the Western Empire. The Saxons and Angels pushed the native Britons to the outer reaches of the island, where they became the Welsh. As a result, 1500 years later we ogle Catherine Zeta-Jones on the movie screen and we’re thankful that Vortigern was suckered by those devilish Angels and Saxons.
The Picts somehow became Scots. Scots somehow became the Irish. The Franks became the French and Germans. Some Vikings merged with exiled Britons and eventually became Normans who eventually became English all over again. What was once known as Vulgar Latin evolved into French, Italian, and the other Romance Languages. Cats slept with dogs. It was nuts.
A few hundred of years without reading and writing (apologies to Gildas and Bede, of course), and the offspring of the biggest bullies on the block came to think of themselves as “nobles.”
I think the number one phrase of the era was, “My forbearers had the good sense to club your sorry sack ancestors. Now kneel, and call me Sire.”
When you apply the patented Bill Snow “I can find meaning in anything” technique, you realize “Nobles” are merely the inbred, over-indulged, illiterate, slang using, spoiled, lazy, and bastard offspring of gangsters. They simply had the good fortune of being born to the winners of various nasty historical knife fights.
And if you lived during that time, this human equivalent of veal controlled virtually every aspect of your life. It was a great system, provided you were the ruler or curried (and found) favor with the ruler. Since the rule of Kings and Dukes and Marquises was largely arbitrary, people lived and died at the whims of these all-powerful brats.
As we all should know, arbitrary systems (whereby goodies are bestowed upon you by a benefactor) are double-edged swords. Just as easily as goodies given to you, your head may end up on the chopping block. It merely depends on the way the wind is blowing today.
The founders of the US threw all that stuff away. They set up a system devoid of arbitrary rule, where freedom reigned and where opportunity beckoned. A man (and eventually, a woman) wasn’t beholden to a Duke for his wellbeing. A man could strike out on his own, and if was able to earn it, he could live like a king.
(Don’t send me nitpicking emails disputing this fact. We might have problems today, but life today is far better than it was in 1600, or 1066, or 450.)
Those of us who are fortunate enough to live in North America, Western Europe (and increasingly Eastern Europe), and much of the Pacific Rim, live in societies that allow us to follow our dreams. While there are a few different flavors of democracy, and while some countries let you keep a little more of your earnings than other countries, the fact is we are not beholden to kings or dukes or other “nobles” who arbitrarily decide what we can do, how we can do it, if we can do it…and whether we get to keep our heads.
We are free.
We are free to try our hand at anything, and if we succeed, we get to keep the spoils of our success. Well, most of the spoils.
We are free to reinvent ourselves. We don’t have to wait for someone else to bestow title upon us. We are free to declare that we are someone new. We just have to back that up with knowing what the heck we’re talking about.
We are free to tell our bosses to go f*** themselves. This might not be a wise course of action, but that freedom exists for all of us. We might not have a job (or a career) after such an undertaking, but at least we’ll still have our lives. No one will slit our throats if we undertake such career suicide.
We are free to not work. No one forces us to get up and pack ourselves on to an El train or a bus, to wait in horrible traffic, to commute 45 miles each way. We are free to find another job, another career, another vocation. We can always quit, do nothing, and live on the street like a bum.
We are free to fail. We are free to fail in enormous proportions. And we are free to pick ourselves up off the floor and try again. And again. And again. There are no limits to the amount of times we can try. Most people love a good comeback story. There is no shame in trying and failing.
We are free to dream. We are free to follow those dreams. We are free to be called fools for following those dreams.
And if we can afford it, we are all free to live like a King. All it takes is money.
And that is why people strike out on their own and try the “entrepreneuring” life.
I think it is easy to beat our selves up and forget this basic tenant of our lives. We can create our own good fortune and our own good luck. Opportunity is out there for us all. Call me an optimist, but I do not believe economics is a zero-sum game. It’s not American baseball, where 8 teams make the playoffs, and only one will be the World Series champ. In entrepreneurship, everyone can effectively win the World Series. There is room for an unlimited number of World Series champs. It certainly isn’t a game where the Cubs, er, I mean, a vague, undefined and nebulous team used here only for purposes of making an example, puts together an incredibly talented bunch of all-stars, then falls short of expectations and collapses in the last week of the season after having the inside track to a wild card birth. Further…OK, I’ll stop now. I’m over it.
The point to this ramble? All of us have the ability to become millionaires.
In US, there are about 2.27 million millionaires. With a population of about 290 million, that means that about 0.78% of the population are millionaires. You can argue this means we all have a 1 in 128 shot of becoming a millionaire. Long odds, perhaps. But they are far better than the one in a million odds that certain naysayers will have you believe. Actually, if you want to talk about 1 in a million shots, those are your approximate odds of becoming a billionaire. According to Forbes Magazine, there are about 240 or so billionaires in the US.
I don’t know about all of you, but that is pretty exciting to me. Those who are struggling in the world of entrepreneurship, keep these odds in mind. You have a shot. You have a chance. All it takes is hard work. All it takes is a never die attitude. If you keep trying, learning, and trying some more, you will eventually put yourself in a position of being called “lucky.”
We live in societies that allow us to dream and try. When you think about it, the only real limitation to a person’s success…is that person himself. If you do not believe you have every opportunity to be rich and do what you want, you are utterly fooling yourself. You do not fully appreciate nor understand what freedom means. Maybe you are too afraid of throwing off the shackles of the biggest Tyrant in the world. That Tyrant is the concept of “I can’t.”
After all, today we have Angel investors, not Angle investors.
The NY Times reported on October 4 that Halsey Minor is starting his own fund. The article is aptly called, “Is it still called a venture fund when you use your own money?”
Minor founded Cnet, as well as some other ventures that have made him a filthy rich dude. Minor’s fund will focus on early stage ventures, and invest a minimum of $500,000. Halsey is eschewing hiring a big staff, and apparently will do all or most of the leg work himself.
At the time of this newsletter, I do not know the name of his new fund. If anyone has any more info about this, send me an email.
5. Romanian Alert!
Those who know me know that I have assembled one of the biggest collections of Romanian friends in the world. This is made easier given the fact my initial Romanian friend was prone to leaving the country at a spur of the moment and returning with a wife and child. Here’s how it happened:
Years ago, when the Bulls were winning championships, I received a phone call: “Bill man. I am thinking of coming over tonight to watch the Bulls game.”
“Yeah, that’s fine. Come over.”
“Or maybe I will go to Romania today. I have not made up my mind. Maybe I will day trade today; maybe I will go to Romania today. I do not know.”
As an aside, I do not think there is anyone else in the history of the world who woke up one morning and was faced with the decision tree of “day trade vs. go to Romania.”
My friend ended up buying the ticket, and left Chicago for what he said was a one-week tour of the homeland. He was gone for a year and a half. He made (or so he claims) the initial trade on Romania’s new option board. And when he returned, he had a wife and child.
No joke.
Needless to say, I’m a bit shell-shocked by the whole Romanian experience. So when another Romanian sends me an email saying he is trying to decide between two options, I naturally expect those options to be about as divergent as possible.
Here is our friend Sebastian Toma’s recent email to me. He’s a great guy. If you’re interested in meeting him, send him an email and he’ll fire off his resume to you.
6. A Romanian Needs Some Help
-----Original Message-----
From: Sebastian A Toma [mailto:Sebastian_A_Toma@notes.ntrs.com]
Sent: Tuesday, October 05, 2004 4:47 PM
To: bill@billsnow.com
Subject: Romanian Blast from the Past
Dear Mr. Bill,
My long lost mentor, I'm glad to see that you are back to your old tricks. Your newsletters are better than ever. A brief update of my life would be appropriate since much has changed since we've last spoken. My wife and I bought a 3 flat in Chicago's exciting Logan Square/Avondale area (Around Belmont and Milwaukee).
I still work at my same old job at Northern Trust and am desperately in need of a career change. I have decided to try my hand at sales and have started looking for a sales position. My major obstacles are that I have no direct experience as a salesman and would prefer to move away from the financial services industry.
This is where I will answer the question you must have asked yourself upon receiving my email: "What does this guy want?" I was hoping that you would offer a little guidance regarding my career change. You are the king of networking as well as a sharp, clear, critical thinking guy. In exchange, I will gladly name my first-born Bill, even if it’s a girl.
To be serious for a moment, I would like your thoughts and help regarding my plan. I have also included my resume for you to honor me by critiquing it.
Finally, if you know anyone in your vast network that is looking for bright, ambitious, young go getter to fill a sales position or any other big bucks position, please feel free to forward my resume. I hope that you are doing well and enjoying life to the fullest.
Respectfully yours,
Sebastian Toma
2956 N. Avers
Chicago, IL 60618
Cell: (773) 988-3397
Work: (312) 630-1513
Sebastian,
Always great to hear from a Romanian. Congrats on the 3-flat.
As far as your resume goes, you are probably asking about the worst person in the world to assess a person's resume. I hate 'em. That's why I set up my website. Resumes are 2 dimensional, flat. They do not show someone's personality. Plus, I wanted to show people I could write. Instead of listing something like "strong writing skills" on my resume, I wrote Venture Capital 101, which led to the column, which led to my newsletter, which led to another project I'm now working on. I'll let others decide if I can write or not.
Instead of saying I know a lot of people, I began to network like crazy, I started to attend as many functions as possible, and I hosted my own functions. Naturally, I captured all of this on the website.
You can use the Internet and today's technology to re-create who you are. You just have to have the balls to do it, you have to know what you want to do or be. And you absolutely must back it up with knowledge.
Anyway, that's what I did. In case you're interested, I've attached my crap ass resume.
Sales? Why would you want to do such a thing? I hate sales. I guess I have a personality that people want in a salesperson, but the thought of doing the same thing day after day...I hate it. You start each month at zero. If you have a great May, it doesn't mean June will be good for you. There's a certain type of person who really likes sales, but I think that is a person is really enjoys “working the system.”
There’s nothing wrong with that, of course. Everyone is different; everyone finds different things enjoyable and rewarding. The key is to find what works for you.
I'm more interested in the big picture, controlling the entity. I never worked well as a salesperson, even though I’ve had a few sales gigs. Its kind of fun to learn the products, to learn how to cold call, to learn how to overcome the inevitable objections. The first sales I made were great; I guess I had that sense of validation that so many sales people look for. But after I "figured it out," and got a few people to sign on the dotted line and write a check, it became boring. My reaction was, "OK, I figured this thing out, what's the next challenge?" The job became routine, and I was absolutely NOT interested in doing the same thing day after day. I realized that my joy in sales wasn't because I was being "validated" by the buyer...it was because I knew that a person writing a check and signing a contract meant a commission for me.
I’ll run your email in my newsletter. Maybe you’ll get some advice from others.
-Bill
TinyURL – Do you have some long and unwieldy domain names in your site? Check out TinyURL, seems pretty interesting. Jeez…that sounds like an ad, doesn’t it? I want it stated for the record that I am not getting anything from TinyURL. I cannot be bought, darn it! In fact, if I was offered some filthy lucre to tout websites, I’m sure I’d immediately say, “How much are you offering?”
A few billion dollars later, and I guess there were some legs left in the Internet search business.
Jacobsohn.com – Jason Jacobsohn is a Chicago-based entrepreneurial gadfly…and fellow DePaul alumnus. He runs a nifty little site, modestly called Jacobsohn.com, where he proffers networking advice, and keeps tab on Chicago area networking events. A good resource for any Chicago-area entrepreneur.
By Dennis Ensing
For an emerging high growth company the number one investment criterion for Venture Capital investors is a top tier management team. But for most entrepreneurs this prerequisite is akin to the Steve Martin joke where he tells you how to be a millionaire - "First, get a million dollars." The painful reality is that you can’t raise funds without top tier management and you often can’t attract top tier management without funds. So how can you break out of this “catch-22”? The answer lies in “just-in-time” management.
“Just-in-time” is a management philosophy that strives to minimize waste by producing the right solution in the right place at the right time. Waste results from any activity that adds cost without adding value.
But “just-in-time” has become an integral part of business operations. Manufacturers demand that suppliers provide inventory when their production line needs it because it is too expensive to move and store.
“Just-in-time” is not limited to the shop floor; it is growingly evident in the finance department too. Operating lines of credit are now integrated into treasury functions and available to so that the business can carry accounts receivable and inventory. The bank advances credit so cash is available as it is needed when it is otherwise tied up in working capital.
The success behind “just-in-time” is the increased availability of top quality resources at just the right moment (i.e. zero down-time). In our ever blurring world the “just-in-time” philosophy is now also heavily influencing human capital decisions. Resource requirements from front-line staff to the executive suite are being found in connected individuals who provide interim or part-time assistance. In these cases, the company gains strategic advantage with high value add and minimal cost – the right solution in the right place at the right time.
Emerging high-growth companies in particular are taking advantage of the trend to “just-in-time” management. Strategically, a company often needs an executive who can be completely trusted, but also has the skills to help move the company forward. The venture wants the "battle scars" that only an executive who has faced diverse challenges can offer. Budget constraints demand these highly sought-after skills be on a part-time basis.
The venture capital industry employs “just-in-time” management with its “Executives in Residence” (EIR’s). Seasoned and successful entrepreneurial CEO’s, VP’s Sales and/or Marketing, COO’s, and CFO’s join a Venture Capital investor’s team to be made available to their portfolio companies or start a new venture. Others, as “free agents” or “Mentor Capitalists”, get connected to savvy but needy companies looking for the management lift to help them succeed. Either way, their role ultimately is to help identify and overcome executional barriers that may impede performance, shareholder value, and liquidity.
”Just-in-time” management, whether it is through EIR’s & Mentor Capitalists, often can provide the venture with:
• Access to hard-to-find, or otherwise unavailable, skills when you need them, and only for as long as you need them to fix problems.
• Access to highly qualified, experienced operators who may be willing to join your team permanently.
• Better execution and measured performance by leveraging the EIR.
• Access to tools and resources that help increase capabilities and reduce effort.
• Connections to potential customers, partners, investors, and employees.
• Access to better funding opportunities through alignment and relationships.
|
Option 1 |
Option 2 |
|
$200,000 spent on 3 “B” level Full time CxO additions to the team.
Result: L - usually sub-par execution resulting in revenue shortfalls and other unsatisfactory delays
|
$200,000 spent on 1 “A” level full-time and 3 “A” level part-time additions to the team.
Result: J - milestones met or exceeded |
Equally, investors backing smart companies using “just-in-time” management receive advantages:
• Access to companies with better risk profiles.
• Access to qualified managers for placement in current portfolio organizations.
• Flexible, low-cost, low-impact approach to reducing executional barriers.
• Better alignment between management and shareholders.
• Opportunities to deliver conditional funding to reduce risk.
In summary, “just-in-time” management delivers a key human resource requirement to start-ups at a crucial stage in their development. It lends immense strategic value by helping build out the management team at an early stage and gaining leverage from economies of scale – five 1-day employees per week yields 5 networks, 5 sets of skills & 5 viewpoints. And it conserves cash - the advantages come at a much smaller financial commitment than hiring a full-time employee.
Dennis Ensing is a “just in time” CFO for several startups across Canada. He is also a member of Wise Mentor Capital, a venture capital consultancy based in Toronto. Dennis@WiseMentorCapital.com
-Ed.
From: Michael Landis [mailto:mlandis@createkproducts.com]
Sent: Monday, September 20, 2004 8:29 PM
To: bill@billsnow.com
Subject: Introductions
Hi Bill,
Just wanted to send a quick note of introduction. Love the newsletter. I have been watching your site for about a year or so. Keep up the good work.
I also wanted to introduce our company. CreaTek Products is bringing some technology products to the scrapbooking industry. What is scrapbooking you might ask; well it’s a $2.5 billion/year industry. Check out our website for more information.
We are working on raising seed capital to get things off the ground and your resources have been helpful.
And regarding weather, we finally dropped below the century mark for the first time since around May.
Michael Landis
CreaTek Products, LLC.
70 S. Val Vista Road
Suite A3 #457
Gilbert, Arizona 85296
480-497-3980
602-647-0242 (Cell)
480-635-9160 (fax)
-----Original Message-----
From: james simons [mailto:jckc1983@yahoo.com]
Sent: Monday, September 20, 2004 3:43 PM
To: bill@billsnow.com
Subject: Re: Bill Snow Newsletter - Monday September 20, 2004
Great newsletter on VC-isms.
I call the over inflation that accompanies any deal "the discount factor." Calculating the discount factor of any enthusiastic party to a deal is a painstaking, highly involved, considerably technical form of alchemy.
In a previous venture we had standard discount factors that we applied to certain people that we structured deals for or with. Many had discount factors as high as 75%, meaning that 75% of what they said was baloney. In the current deal that I am working on, most of my time is NOT spent analyzing the financials and marketing plan but in figuring out the discount factor in the deal.
Often, I feel that new entrepreneurs and investors put far more weight on financials and projections and far less time developing an understanding of Psychology and intuition. I can hire an analyst. I can’t hire intuition. Who says Jedi mind tricks are just or the movies.
Thanks for the newsletter.
Jim
Atlanta (and sometimes Florida)
Methinks VC mind tricks will work better. If we all concentrate enough, we will be able to get many early stage entrepreneurs to suddenly say to themselves, “I will not hit the send button and email this stupid plan to VCs who do not know me.”
-Ed.
From: Peter Baugher [mailto:Baugher@sw.com]
Sent: Wednesday, September 22, 2004 9:16 AM
To: Bill@billsnow.com
Subject: Soft Circled
Good phrase and well done article. Soft expectations are beguiling and dangerous. Optimism fuels entrepreneurs and energizes us all. But candor and regular reality checks are vital.
Peter Baugher
Schopf & Weiss LLP
312 West Randolph Street
Chicago, IL 60606
312-701=9315
Thanks Peter. You get this edition’s award for the best use of “beguiling.” Well, actually, your use of that word is the only time it has ever appeared in one of Bill’s newsletters.
-Ed.
From: garyheck [mailto:garyheck@sbcglobal.net]
Sent: Tuesday, September 21, 2004 5:38 PM
To: bill@billsnow.com
Subject: re: nice people article
Great article in ePrairie. Well-written and more truth than I've seen in a while.
This article should be required reading not just for every entrepreneur and entrepreneur wannabe, but also the starry-eyed folks they attract as employees.
In between naive and cynical is informed. Hopefully folks new to the start up game will read your article and appreciate its wisdom.
Best wishes,
Gary Heck
Thanks Gary. Funny thing, many people have called Bill both naïve and cynical. It scares me to think of what might found between Bill and his big ego.
-Ed.
-----Original Message-----
From: J. CARLINI [mailto:carlini@northwestern.edu]
Sent: Tuesday, September 21, 2004 5:53 PM
To: bill@billsnow.com
Subject: I AM FRIEND OF MANY!!
Bill,
Why are you knocking all of my Nigerian investment opportunities??
Jim
Jim, this begs the question…are you investing in those Nigerian deals, or are you the one sending the emails?
-Ed.
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